The municipal market was unchanged to slightly weaker Friday, closing out a week in which yields rose consistently, reversing the pronounced gains seen earlier in January.
Traders said tax-exempt yields were flat to higher by one or two basis points.
"It's fairly quiet today, and we're down a little bit, but nothing like the past couple of days," a trader in New York said. "We've pretty much been down the entire week, so I guess it's fitting we'll head into the weekend the same way, but it doesn't feel as weak in the market as it has in recent days. Probably off two basis points, if that."
Trades reported by the Municipal Securities Rulemaking Board Friday showed losses. Bonds from an interdealer trade of Arizona's Salt River Project Agricultural Improvement and Power District 5s of 2039 yielded 5.35%, up three basis points from where they were traded Thursday. A dealer sold to a customer insured North Texas Tollway Authority 5.125s of 2028 at 5.02%, two basis points higher than where they were sold Thursday. A dealer sold to a customer Port Authority of New York & New Jersey 5s of 2025 at 4.69%, two basis points higher than where they traded Thursday. Bonds from an interdealer trade of Washington 5s of 2024 yielded 4.54%, up one basis point from where they were sold Thursday. A dealer bought from a customer West Virginia Hospital Finance Authority 6.5s of 2038 at 9.25%, three basis points higher than where they were traded Thursday.
"There was some activity today, but not a really significant amount, and we cheapened up a little bit," a trader in San Francisco said. "We kind of got weaker as you go further out the scale, but I think even the really long end was only off two basis points or so."
The Treasury market showed losses Friday. The yield on the benchmark 10-year Treasury note, which opened at 2.59%, was quoted near the end of the session at 2.61%. The yield on the two-year note was quoted near the end of the session at 0.81% after opening at 0.72%. The yield on the 30-year bond, which opened at 3.25%, was quoted near the end of the session at 3.32%.
The economic calendar was light Friday. However, a slate of economic data will be released this week, beginning today with December existing home sales and composite index of leading economic indicators. Tomorrow, the January consumer confidence index will be released, followed Thursday by initial jobless claims for the week ended Jan. 24, continuing jobless claims for the week ended Jan. 17, the December durable goods report, and December new home sales. On Friday, the advanced fourth-quarter gross domestic product is scheduled for release, along with the January Chicago purchasing managers index and the final January University of Michigan consumer sentiment index.
Projections by economists polled by Thomson Reuters include 4.400 million existing home sales, a 0.3% drop in LEI, a 38.0 consumer confidence index, a 1.8% decline in durable goods, a 2.0% dip in durable goods excluding transportation, 400,000 new home sales, a 5.2% drop in GDP, and a 34.2 Chicago PMI reading.
Activity in the new-issue market was light Friday.